You may have heard about the Foreign Earned Income Exclusion (FEIE), which allows expats to shield more than $100,000 of salary or compensation from US tax each year. There are two ways to qualify for the FEIE. Under the Physical Presence Test (PPT), you must remain outside the US for 330 days in a 365-day period. Under the Bona Fide Residence (BFR) Test, your days outside the US are less important. This test looks at your facts and circumstances to determine whether you were a resident of a foreign country during the calendar year.

But be careful! Claiming the FEIE is not always your best course of action. If you are in a high-tax country, such as the UK, you often get a better tax result by claiming foreign tax credits. Plus, there are other factors to consider.